MURRAY HILL, N.J., Feb. 9, 2006 -- Lucent Technologies announced that it is acquiring substantially all the business assets of troubled Riverstone Networks, a Santa Clara, Calif.-based provider of carrier Ethernet routers for the telecommunications industry, for $170 million in cash.
The net assets to be purchased include Riverstone products, intellectual property, certain contracts and receivables, tangible assets and accounts payable, according to a statement released by Lucent. The deal doesn't include Riverstone's cash, investments or debt. Substantially all of Riverstone's 400 employees are expected to join Lucent.
As part of the deal, Riverstone agreed to file for Chapter 11 bankruptcy protection, under the provisions of which its assets will be sold at auction, with Lucent expected to be the high bidder. If approved by the bankruptcy court, the transaction will be subject to regulatory approvals and other conditions, including the resolution of Riverstone's problems with the Securities and Exchange Commission, which had announced it was going to investigate the company's accounting practices. Riverstone has had problems with the SEC since 2003 over its earnings statements and has had to refile statements for 2003 and 2004, while an audit has delayed the release of 2005's earnings. Since 2003 the company has also seen its two founders leave and had seen a shakeup of its top management as well.
Following the close of the transaction, Riverstone will become part of Lucent's Multimedia Network Solutions business. According to its statement, Lucent expects to obtain all required approvals and satisfy other closing conditions by the middle of 2006. For more information, visit: www.lucent.com